1) no change to the LOR controllers is necessary
2) Yes, you need to get from the standard DMX 1,2 to to the LOR version of DMX on 4,5. See wiring colors in attached picture.
Attached a short cat5 cable (monoprice #2132) to something like this (MonoPrice.com item #5370) ... which makes splicing a real breeze.
3) right, if using LOR + xlights and all on Regular network.
4) The only reason not to do it this way, is that you would lose the LOR hardware version of twinkle and shimmer effects ... and get the DMX version instead (it's different, but configurable).
THe only other reason is that you would technically have less config file changes if you just left your existing controllers 'as is' ... but then you have to go to multi network setting in xlights and assign the DMX (really pixelnet) to "Aux A" network instead of Regular. You also would not need to conversion cable if you run two networks, since LOR stays LOR and pixelnet stays pixelnet.